Forex fiasco all a swizz by the Swiss to fleece Davos attendees

Last week the Swiss National Bank unexpectedly lifted the peg between the euro and the franc, causing carnage on the world’s forex markets and casualties in dealing rooms around the globe. The Swiss franc rose by nearly 30 per cent at one stage before settling back to a comparatively modest 15 per cent rise later – still seismic by forex market norms.

We know the alleged reason for the SNB’s move: the currency had been artificially held down by the bank’s interventions in the forex markets; and the vast amounts spent on euros to hold the franc down were distorting Swiss public finances and threatening hyper-inflation.

Poppycock, I say. The real reason for the move was to trap the poor souls heading off to the World Economic Forum annual meeting in Davos.

The timing was suspicious: just a few days before the first delegates were due to arrive, after they’d booked their air tickets and were therefore committed to the trip.

So all those masters of the universe would have to shell out an extra 15 per cent on the bare essentials during their stay – bubbly beverage, Michelin-starred dinners – and further enrich the wallets of the already wealthy burghers of Davos.

But they did not reckon with the electric financial brain of yours truly. In a master stroke, I paid my hotel bill in advance. And well before the shock rise in the franc.

So I got my stay in Davos at the old rate, earning a substantial saving that I hope my employers will see and appreciate when the inevitable time comes to claim my expenses.

But I doubt it, because the truth is that Davos is such an intrinsically expensive place at the time of the WEF annual meeting that even a 15 per cent saving is merely a nibble at the bill.

Davos is a perfect example of monopoly capitalism at work: the venue is built halfway up a mountain, with a necessarily limited accommodation stock, the affluent WEF-goers will pay whatever the hoteliers and landlords ask.

The other little trick they pull at this time of year is to force you to pay for a week’s accommodation, regardless of how long you’re staying at the WEF.

The annual meeting lasts three days, but the minimum chalet or apartment rental, or hotel stay, is one week. Isn’t there something supremely exploitative about forcing you to pay for something you have no intention of using?

On the other hand, you have to admire the native Swiss profit instinct. They know what the WEF attendees are prepared to pay – a lot – and they are going for it.

Just by way of example, my humble little room in a three-star hotel looks perfectly adequate. It’s got bed, bathroom and Wi-Fi, the real essentials. You tend not to spend much time there anyway, with the congress hall the focus of most waking hours.

But is it really worth the same as a night in the five-star beach-side luxury of Jumeirah’s Al Qasr hotel in an Arabian Deluxe King room? It costs about the same per night, I was staggered to calculate.

After the shock rise in the franc there was much wailing by Swiss hoteliers who feared they would be forced out of business as tourists stayed away in protest at the high exchange rate. Maybe some, in other parts of the country, will face some hardship.

I doubt that will be the case in Davos. The normal laws of supply and demand don't seem to apply there.

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